Legal regulations on confiscation of assets or investment capital

I. Current situation regarding confiscation of assets or investment capital

The confiscation of assets or investment capital from domestic and foreign enterprises or investors is always a significantly concerned issue, aiming to protect national interests, ensure security and order, and effectively control and manage strategic resources and important national assets. At the same time, it also serves to respond to and limit business risks that may arise from the illegal ownership of assets by various organizations or individuals. So, what does the Law state in this matter? Let NPLaw clarify this through the content below.

II. Legal provisions on confiscation of assets or investment capital

1. What is confiscation of assets or investment capital?

Confiscation of assets or investment capital by investors is not specifically defined under current law. However, it can be generally understood as an act of transferring assets (movable or immovable) from private ownership into State ownership, by unilateral authoritative decision of the State. Such nationalization may or may not include compensation; in the latter case, it is referred to as confiscation or forfeiture into the State budget.

Additionally, under Article 45 of the Criminal Code 2015 (amended, supplemented 2017), confiscation of property is a deprivation of part or all of assets owned by a convicted person to be paid into the State budget.

Thus, confiscation of assets is one of the forms of sanctions in the fields of administrative and criminal violations, aiming to deprive part or all of privately owned assets, transferring them into State ownership or being paid into the State budget in serious criminal cases.

2. In what cases are assets or investment capital confiscated?

Confiscation of assets or investment capital applies when individuals or organizations commit violations in the fields of administrative or criminal law.

- For administrative violations:
According to point d, Clause 1, Article 21 and Article 26 of the Law on Handling Administrative Violations 2012, confiscation of material evidence and means used for administrative violations is one of the forms of administrative sanctions applied to serious administrative violations caused by intentional faults of individuals or organizations. It involves transferring to the State budget assets, money, goods, and means directly related to the administrative violation.

- For criminal violations:
Under point d, Clause 2, Article 32 and Article 45 of the Criminal Code 2015 (amended, supplemented 2017), confiscation of property is only applicable to persons convicted of serious crimes, very serious crimes or particularly serious crimes infringing upon national security, drug-related crimes, corruption, or other crimes as provided by this Code. Confiscation of assets is considered an additional punishment for offenders.

3. Which authorities have the competence to confiscate assets or investment capital?

According to Article 30 of the Criminal Code 2015 (amended, supplemented 2017), the Court is the agency with the authority to decide on applying the confiscation of assets against offenders.

For confiscation of assets as material evidence of administrative violations, depending on the field of violation committed by individuals or organizations, each relevant competent authority will have the competence to handle it. For example, under Articles 44, 45, and 46 of the Law on Handling Administrative Violations 2012, tax authorities, market management, or inspectorates have the authority to confiscate material evidence.

III. Questions related to confiscation of assets or investment capital

1. Is it permitted to confiscate assets or investment capital of investors by administrative measures?

According to Article 10 of the Law on Investment 2020, the lawful assets of investors shall not be nationalized or confiscated by administrative measures.

2. Is confiscation of assets or investment capital a form of administrative sanction?

Under Clause 1 Article 21 of the Law on Handling Administrative Violations 2012, confiscation of material evidence and means used for administrative violations is one form of administrative sanction.

Confiscation of such material evidence and means of administrative violations is implemented under Article 26 of this Law and guided by Decree No. 118/2021/ND-CP.

Accordingly, confiscation involves transferring into the State budget assets, money, goods, and means directly related to administrative violations, and is applied to serious administrative violations caused by intentional faults of individuals or organizations.

Thus, confiscation of assets or investment capital is indeed a form of administrative sanction.

3. Is it possible to complain or initiate a lawsuit against the confiscation of assets or investment capital?

According to Clause 1 Article 15 of the Law on Handling Administrative Violations 2012, individuals and organizations subject to administrative sanctions have the right to complain or initiate lawsuits against decisions on administrative sanction under the provisions of law.

Therefore, individuals or organizations have the right to complain or file lawsuits when their assets or investment capital are confiscated if they disagree with the administrative sanction decision of the competent authority.

4. Is there a difference between confiscation by administrative decision and court judgment?

There is a clear distinction:

- Confiscation by court judgment:
Under Article 45 of the Criminal Code 2015 (amended, supplemented 2017), it is only applicable to persons convicted of serious crimes, very serious crimes, or particularly serious crimes infringing upon national security, drug-related crimes, corruption, or other crimes provided by this Code.

- Confiscation by administrative decision:
According to Clause 1 Article 2 of the Law on Handling Administrative Violations 2012, it is one form of administrative sanction imposed on violations with fault committed by individuals or organizations that violate regulations on state management, which are not crimes but under the law must be administratively sanctioned.

5. What measures can enterprises and investors take to avoid having their assets or investment capital confiscated?

To avoid confiscation of assets, enterprises and investors should note:

- Strict compliance with the law: Enterprises must thoroughly understand and comply with legal provisions during their business operations, especially regarding the use and management of assets for the correct purposes.

- Transparency and accuracy in providing information, declaring assets to competent authorities, organizations, or customers: Information on products, goods, and services must be fully and transparently provided in accordance with regulations on product labeling, stamps, and other related matters.

- Tight management of business activities: Enterprises should implement strict management measures in their business operations to avoid unnecessary violations. Establishing internal supervision processes will help minimize errors and ensure service quality.

- Compliance with relevant regulations in the business sector according to Law.

IV. Legal advisory services on confiscation of assets or investment capital

The above is NPLaw’s explanation of issues related to the confiscation of assets or investment capital. If you have any additional questions or need further clarification, please feel free to contact NPLaw via: